Question

Answers for the questions:

A) 695 B) 149,425 C) 9,425 (Overapplied overhead cost) D) 338,950 E) 209,025

(Chapter 4) Chapter 4 Problem 1 Please use the following information to answer questions G-e: Gateway hod only one lob in process during August (Job 2922) and had no finished goods inventory on August 14 Job 2922 was started in July and finished during August. Data pertaining to the job is as follows: Job 2922 Beginning WIP balance on August Materials ($172,000 wos Direct) Labor ($207.000 was Direct) Additional Overhead Costs Units Completed Units in Process at the end of August Units Sold during August 28,975 190,000 213,000 116,000 200 125 *Estimated total manufacturing overhead for August was $145,950. The predetermined overhead rate was made on the basis of direct labor hours. The estimated direct labor hours in August were 210 hours. The actual direct labor hours totaled 215 hours a) What is Gateway's predetermined overhead rate for August? 145,950 - 695 210 b) What is the amount of manufacturing overhead that would be applied to units of product during the periode 695 215=149,425 c) Was overhead underapplied or overapplied for the month of August? And by how much? 18,000 6,000 116,000 140,000 149,425 9,425

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) 3 Predetrmined Overhead Rate 4 = Budgeted overheads / estimated direct labour hours 5 = $145950/210 6 = $ 695 7 Thus the correct answer is predetermined overhead rate = $ 695 9 Part 2) 10 Manufacturing overheads applied 11 = Predetrmined overhead rate * actual direct labour hour 12 = 695 *215 13 = $ 149425 14 Thus the correct answer is manufacturing overheads applied = $ 149425 16 Part 3) 17 Underapplied or overapplied overheads 18 = actual overheads - applied overheads 19 = (indirect material + direct labour+ additional overheads) - 149425 20 = (18000+6000+116000) - 149425 21 = $(9425) 22 Thus the correct answer is overheads overapplied = $ 9425

units sold ) - overapplied overheads 24 Part 4) 25 Adjusted cost of goods sold 26 = (beginning inventory + manufacturing cost) / total units produced 27 = ((28975+172000+207000+149425)/200)*125) - 9425 28 = ( 2787*125) -9425 29 = $ 338950 31 Thus the correct answer is adjusted cost of goods sold = $ 338950 33 Part 5) 34 Finished goods inventory 35 = (manufacturing cost per unit *units in ending inventory) 36 = (2787* (200-125)) 37 = $ 209025 39 Thus the correct answer ending inventory = $ 209025